The Housing and Urban Development (HUD) has a special forbearance initiative
known as HUD Special Forbearance Initiative which permits lenders of Federal
Housing Administration (FHA) insured mortgages to assist creditworthy
homeowners who are behind in making mortgage payments because they are
temporarily unemployed.

To be eligible, the mortgage must be an FHA insured mortgage and the homeowner must:

  1. Have a good payment record and a stable employment history prior to this default
  2. Have a verifiable loss of income or increase in living expenses
  3. Be actively seeking employment, but have not received a commitment of re-employment
    at the time the lender is reviewing the homeowner’s financial information
  4. Be an owner-occupant, committed to occupying the property as a primary
    residence during the term of the special forbearance agreement; and
  5. Not have repeatedly broken past informal or formal forbearance plans without
    good cause.

Under this initiative, a lender may enter into a written special forbearance
agreement with a homeowner whose FHA insured mortgage is at least three,
but not more than 12 months overdue, and whose loan is not in
foreclosure at the time the agreement is executed.

Under this initiative monthly mortgage payments can be postponed for a
minimum of four months. While there is no limit on the maximum number
of months, at no time may the agreement allow the delinquency to exceed
the equivalent of 12 monthly principal, interest, taxes and insurance
installments. The lender will verify the homeowner’s employment status
monthly and renegotiate the terms of the special forbearance plan when
the employment status changes. The lender will also verify that the property
has no physical conditions that might adversely impact its continued use
or ability to support the debt. Homeowner will not be able to obtain a
special forbearance if the property is in such a deteriorated condition
that repairs drain his monthly resources.